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Just cuts for fossil fuels? Supply-side carbon constraints and energy transition

Philippe Le Billon and Berit Kristoffersen (2020)

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This paper mentions the issues raised by transitioning away from fossil fuels, noting the geographical political economy of fossil fuel extraction sectors. The article engages with these difficulties and considers principles of justice to advance supply-side policies fairly. In this article, supply cuts are measures/processes that constrain the production/transportation/transformation of raw materials, reducing supply for consumers.  

The paper recognises several benefits to supply cuts e.g. preventing long-term carbon lock-in. However, it observes that such policies have remained marginal within mainstream organisations and processes because: fossil fuel reserves are sovereign state assets; the current political economy remains averse to bans; carbon leakage concerns; the lobbying power of the fossil fuel industry; emissions produced when imported fossil fuels are combusted do not count as the emissions of the exporting country under prevailing emissions accounting rules; fossil fuel production can contribute a significant amount to a country’s economy and government revenue; and demand-side measures are needed alongside supply measures. 

The paper suggests using prioritisation criteria for considering who should implement supply cuts. It canvasses four potential principles. First, under a utilitarian conception, countries who produce the most fossil fuels, have the most carbon-intensive fuels and the costliest fuels should reduce extraction first. Second, to achieve distributive justice, cuts should be prioritized where countries can afford to do so i.e. wealthy countries with low dependence on fossil fuels. Based on retributive justice, countries should be prioritized based on developmental efficiency i.e. countries with a resource curse that mismanage rents. Restorative/reparative justice looks to past production, prioritising cuts amongst longstanding major producers. Finally, rehabilitative justice looks to the willingness of fossil fuel producers to implement cuts, focusing on a coalition of first movers.  

The paper then outlines potential pathways for supply cuts between coal, oil and gas. It concludes coal is best addressed through supply cuts, with oil second, and gas last. It considers coal the “most likely candidate” for supply cuts because of its higher carbon intensity (when compared with oil and gas), its relatively low rents, and political feasibility. For coal, it suggests a mix of economic incentives, supply-side policies, and morally motivated production moratoria. For oil, it suggests combining market incentives, public pressure, and a paradigm shift away from “extractivist” models of development to alternatives. For gas it suggests a global rejection of gas fracking.  

The paper makes a range of general recommendations as to efforts needed to achieve mobilisation on supply-side policies. It suggests policy coalitions are needed amongst producers because carbon leakage means the scale of effort needs to go beyond the individual. It suggests effectiveness can be achieved though mobilising coalitions that perpetuate norms against fossil fuel production.  

The paper can support the need to use supply-side policies with respect to coal, e.g. rejecting coal infrastructure proposals. It also shows the need for leadership of willing participants to contribute to norm-creation and eventually trigger action, reinforcing the normative power of rejecting fossil fuel projects. The paper can be used to demonstrate differentiated approaches to extraction based on different equity principles, for example supporting certain countries taking the lead in supply-side policies over others. These arguments strengthen the moral justification for projects in certain countries to be rejected. 

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